Backers pull property tax initiative

BOISE – Backers of a property tax-limiting initiative have withdrawn the measure just a week after it was filed, saying they need to make changes.

“Not everybody is agreeable on it – some of ‘em are having problems with it, some of ‘em are having problems with the people that are having problems,” said Chuck Cline of Orofino, chairman of Idaho Property Tax Reform. “It’s enough that makes us want to pull it.”

Backers will meet today to go over various questions about the long, complicated initiative – it was 72 pages as filed – and decide what to change, Cline said. He said he expects it to be filed again within 10 days, and possibly before the end of the week.

“It’s not pulled totally,” he said. “It’s a little bit of a mess, and we thought the easiest thing was to pull it, get the answers.”

A key sticking point may be the initiative’s elimination of the “50-50” homeowner’s exemption, a property tax exemption that was enacted by voter initiative in 1982. It exempts from property taxes 50 percent of the value of improvements, up to $50,000, for an owner-occupied home.

The exemption hasn’t been adjusted for inflation or changed in any way since voters enacted it; at a series of property tax hearings held in four North Idaho locations last month by a special legislative committee, the top request from the hundreds of citizens who spoke was to increase the homeowner’s exemption.

Cline’s initiative seeks instead to treat all property the same, whether it’s a home, a farm, or a business. It would limit taxes to 1 percent of value and limit value increases to 2 percent every five years.

The measure also would freeze taxable values at 2004 levels, plus the small increases. When property sells, it would be revalued at the sale price.

“The thing that we’re doing is setting up a 1 percent cap so people will know how to budget the rest of their money,” Cline said. “The 50-50 thing, some of the people down south want to see it go, some of the people up north are concerned about it. It affects people differently.”

He noted that the loss of the 50-50 homeowner’s exemption would have the most impact on homes valued below $100,000, “and I don’t think you’re going to find a lot of those,” he said. “That’s what we have to do – we have to address the impact on it. There’s a few other things in there too.”

The complex initiative also includes an array of other changes in Idaho tax laws. Among them:

•It requires what it calls “Truth in Transaction,” requiring the immediate reporting of the full sales price for any property sale, construction or exchange. Failing to report or falsifying the information would be a felony punishable by five years in prison.

•School emergency fund levies would require a two-thirds vote; no vote is required now.

•All taxes on personal property would be eliminated.

•It eliminates a 3 percent cap on increases in local government budgets.

Idaho voters in 1978 approved a One Percent Initiative that sought to limit taxes to 1 percent of value, but it wasn’t workable with Idaho’s constitution and tax system, and the state Legislature amended it to instead impose freezes, then caps, on local government budgets. The 3 percent budget cap, which makes exceptions for new construction and annexation, is the last remnant of that effort.

To place an initiative on the November 2006 ballot, sponsors would need to gather 47,881 valid signatures by next April 30.